As the Hong Kong Special Administrative Region celebrates its 28th anniversary, the sixth-term SAR government also completes its third year in office.
Clear indicators show that Hong Kong’s overall economy has followed a robust upward trajectory over the past three years under the current administration. At the same time, reform is being pursued and implemented in many policy areas, generating strong momentum for further development and attaining numerous commendable breakthroughs.
Over the past three years, Hong Kong has emerged from a downturn and returned to positive territory. Improvements have been observed in multiple areas, including median household income, waiting time for public rental housing, labor benefits and rights, and primary healthcare. The city’s gross domestic product has grown for nine consecutive quarters, surpassing HK$3 trillion ($382 billion). Incomes for wage earners have increased in real terms, and inflation has remained broadly stable.
The financial sector, serving as the economic barometer, has delivered a set of encouraging indicators.
Since the beginning of this year, the average daily turnover of Hong Kong’s stock market has exceeded HK$240 billion. In terms of IPO fundraising, Hong Kong ranked first globally again. New-economy and biotech companies accounted for approximately 14 percent of the listed firms, over 27 percent of total market capitalization, and more than 30 percent of total turnover. These figures point to a dual-track improvement in both scale and quality.
As of the end of March, the number of funds registered in Hong Kong reached 976, with net capital inflows exceeding $44 billion or a year-on-year increase of 285 percent. It is projected that within two to three years, Hong Kong will become the world’s leading cross-border asset management center. These figures indicate that Hong Kong has become a major destination for international capital.
Statistics for 2023 showed that the number of new business policies issued in Hong Kong reached 1.08 million, with total premiums nearing HK$220 billion, or increasing over 40 percent and 70 percent respectively compared to 2022. As of April, total deposits in local banks exceeded HK$18 trillion, representing a 19 percent increase from the end of June 2022. These figures demonstrate the significant strengthening of Hong Kong’s insurance and banking sectors.
In September 2024, the Global Financial Centres Index (GFCI) 36 Report, by Z/Yen from the United Kingdom and the China Development Institute from Shenzhen, ranked Hong Kong third globally. In the GFCI 37 Report, released in March, Hong Kong maintained its third-place position, scoring 10 points ahead of Singapore and only two points behind London.
These notable achievements in the financial sector highlight the effectiveness of the current administration in delivering on the goal of “better integrating a capable government with an efficient market”. A two-pronged approach has helped to produce these positive results.
First, the administration persistently pursued progress in various areas in a steady manner. For instance, despite being confronted by various pressures and risks, Hong Kong has firmly advanced reforms in the financial sector. Measures have been introduced to facilitate the listing of tech firms and US-listed Chinese enterprises in the local stock exchange. Efforts have also been made to seek national policies that enhance financial connectivity between Hong Kong and the Chinese mainland.
Second, the administration has adopted a proactive governance style. For example, Chief Executive John Lee Ka-chiu has led multiple delegations to the Middle East and Association of Southeast Asian Nations countries, attracting investment from Middle Eastern sovereign wealth funds and encouraging family offices from ASEAN countries to establish operations in Hong Kong.
Over the past three years, the HKSAR government has made great strides in innovation and technology, and these efforts are now beginning to bear fruit. By the end of 2024, the number of local startups reached 4,700 — a record high. Hong Kong Science Park and Cyberport have nurtured 22 listed companies and 20 unicorns, with affiliated startups holding over 700 intellectual property rights. Since the end of 2022, Hong Kong has attracted over 80 frontier technology enterprises, which are expected to invest over HK$50 billion and create more than 20,000 jobs in the initial years of operation. Since July 2022, Invest Hong Kong has attracted and assisted nearly 1,400 overseas and mainland companies with establishing or expanding their respective businesses in Hong Kong, which are expected to bring in over HK$100 billion in investment and create about 20,000 jobs. Since the end of 2022, various talent admission plans have brought more than 210,000 professionals to Hong Kong. In 2023, the city’s gross research-and-development expenditures approached HK$33 billion, representing a year-on-year increase of 10 percent.
These encouraging trends suggest that the HKSAR government’s targeted policies — focusing on talent, capital, enterprises and platforms — are paying off. Once fully activated, the innovation and technology sector has the potential to become a powerful new engine driving Hong Kong toward a leap in economic development.
While the current administration has taken numerous steps to boost local consumption, it remains lackluster despite the broader economic recovery. Statistics show that private consumption declined by 0.6 percent in 2024 and by 1.1 percent in the first quarter this year.
Subdued local consumption could be attributed to two key factors — the growing trend among Hong Kong residents of “going north” to spend; and the increasing availability of international brands on the mainland, which has diluted Hong Kong’s appeal as a shopping destination for mainland residents.
Both the HKSAR government and the business sector have recognized the profound changes in the consumption landscape and are mulling a transformation. For example, the cultural and tourism industries are implementing the concept of “tourism is everywhere in Hong Kong”. Many retailers are expanding their online businesses both locally and internationally. Chain restaurants are launching limited-edition menu items to attract customers.
It is also worth noting that policies approved by the central government — including expanding the Individual Visit Scheme to cover more mainland cities, raising the tax-free quota for mainland residents shopping in Hong Kong and Macao, and reinstalling the multiple-entry-permit arrangement for Shenzhen residents — are yielding positive results in Hong Kong’s consumer market. Meanwhile, major infrastructure projects, such as the third runway at Hong Kong International Airport and the construction of the Kai Tak Sports Park, are supporting “mega-event economy” development.
Recently, Secretary for Commerce and Economic Development Algernon Yau Ying-wah led a delegation to France to attend China Forum organized by Business France in Paris, where he promoted Hong Kong’s unique role as a gateway to Asia and the Chinese mainland. The Hong Kong Trade Development Council will host another edition of the Hong Kong Shopping Festival in August to help local businesses leverage e-commerce platforms to explore the mainland market.
All these efforts signal a speeding-up of Hong Kong’s consumption sector transformation and upgrading. With a multipronged approach, a gradual recovery in the local consumer market is well within reach.
The author is vice-chairman of the Committee on Liaison with Hong Kong, Macao, Taiwan and Overseas Chinese of the National Committee of the Chinese People’s Political Consultative Conference, and chairman of the Hong Kong New Era Development Thinktank.
The views do not necessarily reflect those of China Daily.
